Stem cell transplantation is emerging as a potential treatment option for acute renal failure (ARF) because of its capability to regenerate tissues and organs. To better understand the mechanism of cell therapy, in vivo tracking cellular dynamics of the transplanted stem cells is needed. In the present study, in vivo monitored magnetically labeled mesenchymal stem cells (MSCs) were transplanted intravascularly into an ARF rat model using a conventional magnetic resonance imaging (MRI) system. Rat bone marrow MSCs were labeled with home synthesized Fe2O3-PLL, and labeled (n = 6) or unlabeled MSCs (n = 6) were injected into the renal arteries of the rats with ARF induced by the intramuscular injection of glycerol. Using the same technique, labeled MSCs were also injected into the rats assigned to a control group (n = 8). MR images of kidneys were obtained before injection of MSCs as well as immediately, 1, 3, 5, and 8 days afterwards. MR findings were analyzed and compared with histopathological and immunohistochemical results. These results showed that the rat MSCs were successfully labeled with the home synthesized Fe2O3-PLL. In both renal failure and intact rat models, the labeled MSCs demonstrated a loss of signal intensity in the renal cortex on T2*-weighted MR images, which was visible up to 8 days after transplantation. Histological analyses showed that most of the labeled MSCs that tested positive for Prussian blue staining were in glomerular capillaries, corresponding to the areas where a loss in signal intensity was observed in the MRI. A similar signal intensity decrease was not detected in the rats with unlabeled cells. These data demonstrate that the magnetically labeled MSCs in the rat model of ARF were successfully evaluated in vivo by a 1.5 T MRI system, showing that the mechanisms of stem cell therapy have great potential for future ARF treatment recipients.